E8.
8 Chippewas Company
a.
04-Jan Accounts receivable $ 640
Sales revenue (80*8) $ 640
11-Jan Purchases (150*6.50) $ 975
Accounts payable $ 975
13-Jan Accounts receivables $ 1,050
Sales revenue (120*8.75) $ 1,050
20-Jan Purchases (160*7) $ 1,120
Accounts payable $ 1,120
27-Jan Accounts receivable $ 900
Sales revenue (100*9) $ 900
31-Jan Inventory (7*110) $ 770
Purcahses (975+1120) $ 2,095
Cost of goods sold * $1925
Inventory (100*6) $ 600
*(600+2095-770)
b. Sales revenue (640+1050+900) $ 2,590
Cost of goods sold $ 1,925
Gross profit $ 665
c.
04-Jan Accounts receivable $ 640
Revenue (80*8) $ 640
Cost of goods sold $ 480
Inventory (80*6) $ 480
11-Jan Inventory $ 975
Accounts payable (150*6.50) $ 975
13-Jan Accounts receivables $ 1,050
Revenue (120*8.75) $ 1,050
Cost of goods sold $ 770
Inventory (20*6)+(100*6.50) $ 770
20-Jan Inventory $ 1,120
Accounts payable (160*7) $ 1,120
27-Jan Accounts receivable $ 900
Revenue (100*9) $ 900
Cost of goods sold $ 675
Inventory (50*6.50)+(50*7) $ 675
d. Sales revenue (640+1050+900) $ 2,590
Cost of goods sold (480+770+675) $ 1,925
Gross profit $ 665
E8.9 LoBianco Company
In all cases where FIFO is used, the inventory and cost of goods sold
would be the same at the end of the month whether a perpetual or periodic system is used.
a. Periodic Inventory
FIFO Method
Purchases Sales
Date No. Units Unit cost No. units Unit cost
01-Apr 600 6.00
03-Apr 500 10.00
04-Apr 1500 6.08
08-Apr 800 6.40
09-Apr 1300 10.00
11-Apr 600 11.00
13-Apr 1200 6.50
21-Apr 700 6.60
23-Apr 1200 11.00
29-Apr 900 12.00
29-Apr 500 6.79
5300 4500
Cost of goods sold 28280
Ending Inventory 5375
Average-cost method
Cost of goods sold 28575 33655 6.35
Ending Inventory 6.35x (5300-4500)= 5080
b. Perpetual inventory
Average-cost method
Cost of goods sold 28368.75 30260 6.3042
Ending Inventory 5286.25
c. During inflationary period, FIFO Method shows highest net income
goods sold
periodic system is used.
E8.10 Esplanade SA
A. Specific identification method
Date No. Units Unit cost Total cost
Beginning (January 1) 400 $ 8.00 $ 3,200
Purchase (January 5) 1100 $ 9.00 $ 9,900
Ending inventory at March 31, 2019 1500 $ 13,100
B. FIFO method
No. Units Unit cost Total cost
March 26 (Purch.) 600 $ 12.00 $ 7,200
February 16 (Purch.) 800 $ 11.00 $ 8,800
January 25 (Purch.) 100 $ 10.00 $ 1,000
Ending inventory at March 31, 2019 1500 $ 17,000
C. Weighted-average method
No. Units Unit cost Total Cost
Beginning Inventory (January 1) 600 $ 8.00 $ 4,800
Purchases:
January 5, 2019 1100 $ 9.00 $ 9,900
January 25, 2019 1300 $ 10.00 $ 13,000
February 16, 2019 800 $ 11.00 $ 8,800
March 26, 2019 600 $ 12.00 $ 7,200
Total cost 4400 $ 43,700
Unit cost = $43,000/4,400= $ 9.93
Ending inventory = 1500*9.93= $ 14,898
